Dennis Gartman: $100 Oil Won’t Last

After weeks of shrugging it off, it seems that unrest in the Middle East is starting to rattle the bulls.

Of course energy again has emerged as the market wild card.

Considering the protests and violence are spreading into nations that generate large quantities of oil, investors are worried how disruptions might ripple across the world.

Commodities Bear Market Ahead?

Perspective on where commodities are headed, particularly in light of the violence in the Middle East, with Dennis Gartman, editor, The Gartman Letter.

However, if you’re among those selling stocks because you’re concerned oil is going to skyrocket above its 2008 record of $142, strategic investors Dennis Gartman says you’ve got it all wrong.

In a live interview on CNBC's Fast Money he says anything much higher than ”$100 isn’t sustainable over any period of time.” He tells us that "the market still has an awful lot of new crude available and investors need to understand that. I have a hard time believing that WTI can sustain itself above $100."

Does that mean you should breathe a big sigh of relief?

Only if Saudi Arabia shows signs of crumbling should investors change their thesis and factor in sharp gains in the price of oil, Gartman tells us.

In other words, trouble in Saudi Arabia is a game changer, but nothing short of that. And it’s largely believed Saudi Arabia is far more stable than many other nations in the region.

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THE STOCK MARKET

However, not everyone shares Gartman's confidence or his outlook.

What if ”events in Libya mean prices at the pump shoot up to $3.50 to $4 a gallon,” adds Brian Kelly. How will that impact the already fragile consumer?

That's what Kelly thinks American markets are worried about.

And he may be right. On Tuesday, the S&P suffered its worst percentage drop in about six months.

"How significant a sell-off we get, the next 24 to 48 hours is going to be important. If we can hold this 1,315 on the S&P and hold the trendline, than we can probably get through this,” says said Stephen Massocca, managing director of Wedbush Morgan in a Reuters interview.

“But any more weakness and there will probably be a cavalcade lower," he adds.

Guy Adami expects the sell-off to continue. And that begs the question, how low will we go? ”The level I’m watching in the S&P is 1302,” he explains. That was a past level of resistance should now be support.” In other words, Adami will find it telling if that level holds.

Word on the Street

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Joe Terranova agrees that the selling continues. “There are no one-day events,” he says. He’s particularly concerned by the negative price action in Apple , copper and grains; recent high fliers. "Risk is coming off the table, clearly," he says.

Does that means we're at the start of a correction? Tim Seymour doesn't think so. "I don't expect a major correction but there's way too much uncertainty right now." to become a buyer.

Stephen Weiss tells the desk we're moving into a period when it will be important to understand what’s moving due to momentum versus what’s moving due to fundamentals. He’s cautious of the momentum names.

"Nvidia and Micron were down big on Tuesday," adds Terranova. In other words two big momentum names sold-off.

"That could be a signal of a larger correction. The quesitons is how deep?"

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